Key European markets suffer double-digit Oct. sales declines

Volumes nearly match lows from worst of 2008-2009 crisis

German, French, Spanish and Italian car sales plunged in October as Germany, Italy and Spain continued to suffer from the end of their scrapping schemes and France's reduced subsidy was not enough to prevent a drop versus the strong sales this time last year.

The subsidies launched to encourage drivers to trade in old cars were highly successful but carmakers are now facing tough comparisons with the booming sales last year when schemes boosted sales.

France still has a 500 euro (about $700) scrapping bonus in place until the end of the year. Sales fell 18.7 percent in October to 171,449 units. Over the first 10 months passenger sales are down 1.4 percent in France.

New-car registrations in Germany, Europe's largest economy, continued to shrink in October, falling 20 percent after slipping almost 18 percent in September, according to the German motor transport authority (KBA). Automakers sold 256,775 cars in Germany last month. Through 10 months, sales in Germany were down 26.8 percent to 2,423,627 units.

Germany's scrappage scheme ended at the beginning of September last year.

European carmakers are increasingly relying on fast-growing emerging markets to boost their sales. On Monday South Korean and Indian carmakers posted strong October sales, but their Japanese counterparts saw double-digit declines in domestic sales.

Dramatic decline

"Only in the major crisis of 1993 and in the darkest period of the current crisis -- from the end of 2008 to the beginning of 2009 -- have steeper falls been recorded," said industry think tank Promotor in a statement.

In France, "(October) was bad, but we were expecting it because we are starting to enter the period in which 2009 saw its figures inflated by the scrapping incentive," said a spokesman for industry association CCFA.

"November and December sales figures will be even worse," he said. However, the French market should see sales of over 2 million units for the full year, the spokesman added.

In 2009 the French market saw sales increase by 10.7 percent to 2.3 million units, with customers flocking to showrooms toward the end of the year in particular, to take advantage of the full 1,000-euro scrapping scheme before it decreased at the start of 2010.

Flavien Neuvy, head of the automobile industry research department at French consumer credit organization Cetelem, said: "With the end of scrapping schemes, the French and European markets are returning to their fundamentals, and these are not dynamic."

"Drivers drive less and less, cars are more and more reliable and customers keep them longer and longer -- eight and a half years on average," he said. "The question is no longer how the end of the year will turn out, but what 2011 will be like."

In October, Europe's second-biggest carmaker, PSA/Peugeot-Citroen SA saw a 17.3 percent decline in its group sales in France, while Renault SA's group sales dropped 21.9 percent year-on-year last month.

For the full year, car registrations are expected to fall between 20 percent and 25 percent. In 2009, about 3.8 million new cars were registered in Germany. The German auto industry estimates that about 2.9 million cars will be registered in the country in 2010.

Full-year sales in Italy are expected to slip to 1.95 million units from 2.16 million units last year – a decline of 10 percent.

In Belgium, which never had a scrappage scheme, car sales rose 9.68 percent in October.